Let The Taxman Help Pay For Your Life Cover
If you’re a company director and you have life assurance in place to protect your family, you could be paying more tax than you need to. Relevant life policies are a way of providing death in service benefits on an individual basis no matter how small your business is.
What are the benefits?
Although the company pays the premiums, they are not normally assessable to income tax on the employee as a benefit in kind. This can be a significant saving, particularly for a higher rate taxpayer.
Unlike a registered group scheme, the benefit will not form part of the employee’s annual or lifetime pension allowance.
These payments may be treated as an allowable expense for the employer in calculating their tax liability, as long as the local inspector of taxes is satisfied they qualify under the ‘wholly and exclusively’ rules.
In most cases the benefits are paid free of inheritance tax, provided the benefits are payable through a discretionary trust.
Who are relevant life policies suitable for?
Small businesses that do not have enough eligible employees to warrant a group life scheme.
High-earning employees or directors who have substantial pension funds and do not want their benefits to form part of their lifetime allowance.
They are not suitable for the self-employed or equity partners, although their employed staff could be covered.
Are there any limits to the cover I have?
The legislation does have some limits to qualify for the tax concessions, and to ensure these are met we make sure that:
The cover must be paid in a single lump sum before the age of 75.
Only death benefits can be provided.
Benefits must be paid through a discretionary trust.
Beneficiaries are normally restricted to family members and dependants
Too see how much you could benefit from this call us on 0800 6342 111 to discuss your circumstances further.
